Largest fraud trial to continue

Last updated 05:00 18/03/2014

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New Zealand's largest fraud trial will continue, after defence counsel yesterday failed in their bid to have the judge removed.

Former South Canterbury Finance (SCF) chief executive Lachie McLeod and former directors Edward Sullivan and Robert White have pleaded not guilty to 18 individual and combined fraud charges laid by the Serious Fraud Office (SFO) in December 2011.

SCF collapsed in August 2010, with $1.58 billion of taxpayers' money paid to investors.

The three Queen's counsel acting for the three defendants had called for Justice Paul Heath to remove himself from the case.

Comments by SFO director Julie Read at a conference, where she said: "We are very fortunate to have Justice Heath as our trial judge", showed a perception of partiality and required the trial to be aborted, they said. Justice Heath was chairing the conference.

The trial began last Wednesday in the High Court in Timaru, with the Crown finishing its opening on Thursday.

In rejecting the application yesterday, Justice Heath said he was not satisfied that the conditions for recusal had been made out.

"The trial will continue, with full reasons to be released later."

Ms Read, also a lawyer, had provided an affidavit which said her comments were a courtesy to Justice Heath, and not intended to create bias towards the SFO.

"I would not consider it fortunate to have a judge who was inclined in favour of the prosecution as such a situation would be more likely to lead to error and the necessity for appeals. As a prosecutor, I consider it better to have a judge who is at pains to ensure that the accused gets a fair trial," she said.

Earlier, Bruce Squire, QC, acting for White, said the application for recusal was made on the perception of bias, not actual bias. "The test is whether a fair-minded, objective lay observer would consider that there is a real possibility that a fair trial in this instance would not take place."

Philip Hall, QC, acting for Sullivan, said it was a matter of disqualification by association.

Colin Carruthers, QC, acting for the Crown, argued there was no basis for recusal, which would have resulted in the judge standing down from the trial.

"Finding existence of an association is not enough to disqualify a judge," he argued.

Recusal could have led to the trial being delayed for years as a new judge would have needed to be found and a three to four-month trial scheduled. It has already taken two years and three months to get the matter to trial. The first witness is former SCF director Stuart Nattrass, who will give evidence today.